The world has never been so indebted after a year of fighting with Covid-19 and the "mountain" of debt is forecast to increase.

Governments, companies and households raised $24 trillion last year to offset the damage of the pandemic, bringing total global debt to an all-time high of $281 trillion by the end of 2020. , or more than 355% of global GDP, according to calculations by the Institute of International Finance (IIF) based in Washington, USA.

Sustainability research director Emre Tiftik and the institute's economist Khadija Mahmood say the world has little choice but to continue borrowing in 2021. Even if a vaccine is released, the country's low interest rate policy central banks will remain above pre-pandemic levels.

Governments with large budget deficits are expected to increase their debt by $10 trillion this year due to social and political pressure, pushing their debt burden to $92 trillion by the end of 2021, the IIF estimates. "The most important challenge is to find a well-designed strategy to get out of these extraordinary fiscal measures," said Emre Tiftik.

Both mature and emerging markets will have to find the perfect balance. The economic recovery may prompt some governments to start developing strategies to stimulate again, but doing so too soon can increase the risk of default and bankruptcy. Waiting too long can lead to debt that is difficult to handle.

According to the IIF, the debt-to-GDP ratio of the non-financial sector in France, Spain and Greece increased the most of the mature economies, as governments quickly ramped up their borrowing.

In emerging markets, China saw the biggest increase in debt ratios last year, followed by Turkey, South Korea and the United Arab Emirates. South Africa and India alone have the largest increase in government debt in 2020. The largest accumulation of corporate debt is Peru and Russia.